Louisiana HB 599 Would Provide Overdue Tax Relief

Submitted by dpeterson on Tuesday, May 14th, 2019, 4,31 PM

After promising Louisianans he would not raise taxes, in 2016, Governor John Bel Edwards (D) dealt taxpayers the largest tax hike in state history in the form of a 25 percent sales tax increase. That $1.5 billion tax hike, which raised the sales tax rate from 4 cents to 5 cents on the dollar, was sold as “temporary” and set to expire on June 30, 2018.

Of course, that claim was not true.

Governor Edwards called three special sessions last year until 0.45 percentage points of the “temporary” 1 percentage point sales tax hike was renewed. Under current law, this tax increase – which is accurately described as a tax increase since the entire penny was supposed to expire – is supposed to remain in place through June 30, 2025 unless lawmakers take actions to remove it sooner.

Fortunately, Representative Lance Harris’s House Bill 599 would do just that. If implemented, HB 599 would phase out the 0.45-cent sales tax increase by reducing it by 0.10 cents on July 1 in 2020, 2021, and 2022 before it is fully repealed and the sales tax rate is returned to 4 percent on July 1, 2023. Over 5 years, HB 599 would provide all hardworking taxpayers across Louisiana with $914 million in owed tax relief.

Grover Norquist, president and founder of Americans for Tax Reform, sent Louisiana lawmakers a letter in support of HB 599. The full text of the letter is pasted below:

May 14, 2019

To: Members of the Louisiana House of Representatives
From: Americans for Tax Reform

Re: Support House Bill 599

Dear Representative,

On behalf of Americans for Tax Reform (ATR) and our supporters across Louisiana, I urge you to support House Bill 599, legislation that would provide some of the much-needed tax relief that is owed to the hardworking taxpayers across the Pelican State.

Louisiana’s spending has been increasing well beyond the rate of population and inflation for years, and its state and local spending per capita is significantly greater than every other state in the Southeast. Yet, in 2016, Louisiana taxpayers were still dealt the largest tax increase in state history in the form of a 25 percent sales tax hike that took the rate from 4 to 5 cents on the dollar.

This massive $1.5 billion tax increase was supposed to expire on June 30th 2018, but predictably, that was not the case. Last year, Governor John Bel Edwards (D) called three special sessions until 0.45 cents of the expiring “clean penny” was renewed. This tax increase – which was indeed a tax increase since the entire penny was supposed to expire – will be in place through June 30, 2025.

Fortunately for Louisianans, if implemented, HB 599 would provide some of the relief that is owed to taxpayers by phasing out the 0.45 percentage point tax increase quicker than would be the case under current law. Under HB 599, the state sales tax rate would be reduced to 4.35 percent from 4.45 percent on July 1, 2020, then to 4.25 percent on July 1, 2021, then to 4.15 percent on July 1, 2022, and finally, to 4 percent on July 1, 2023.

There is simply no justification for voting against HB 599. In addition to sales tax relief being owed to Louisianans, there is a wealth of social science demonstrating the economic harm that results from higher levels of taxation. John Hood, chairman of the John Locke Foundation, a Raleigh, N.C.-based think tank, surveyed over 680 peer-reviewed academic journal articles on fiscal policy published over the past quarter century. According to Hood, “the preponderance of peer-reviewed research finds a negative relationship between state taxes and measures such as job creation and income growth.”

Tax Foundation economist William McBride reviewed academic literature going back three decades and found, “while there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy.”

As such, ATR supports HB 599, which would provide $914,000,000 in owed tax relief to all taxpayers across the Pelican State over 5 years, and urges lawmakers to vote YES.

Sincerely,
Grover Norquist
President
Americans for Tax Reform

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